Oil Prices Rise 3% Toward $94 as Iran War Keeps Markets on Edge

US stocks drifted in mixed trading Wednesday as oil prices climbed another 3%, raising fresh concerns about inflation and potential Federal Reserve rate hikes, even as strong corporate earnings from several major companies provided some support to the market.

Major Indexes Mixed as Earnings Offset Oil Pressure

The S&P 500 was virtually unchanged, coming off its best session in three weeks, as it swung between modest gains and losses early in the day. The Dow Jones Industrial Average rose 175 points, or 0.3%, while the Nasdaq composite fell 0.4%. The majority of S&P 500 stocks advanced following a strong run of quarterly earnings, but elevated oil prices weighed broadly on the market by raising costs for most businesses and compressing profit margins.

Strong Earnings From Philip Morris, AT&T, and Super Micro

Philip Morris International rose 3.2% after reporting stronger-than-expected quarterly profit and revenue, with smoke-free product shipments up 7.5%. AT&T gained 3.6% after topping earnings estimates, with CEO John Stankey announcing plans to accelerate roughly $10 billion in shareholder returns this year through buybacks. Super Micro Computer surged 21.4% after the AI server maker said it expects stronger profit margins for the latest quarter than previously forecast, though revenue is projected to come in at the low end of its $11 billion to $12.5 billion guidance range.

Those gains offset a 7.3% drop in GE Vernova after the company reported weaker-than-expected quarterly profit.

Alphabet Earnings Awaited, AI Spending Under Scrutiny

Alphabet edged 0.3% higher ahead of its after-hours earnings report. Investors are watching closely for signs that the billions of dollars flowing into AI processors, computer memory, and related infrastructure are generating the productivity and profit returns needed to justify elevated chip stock valuations.

“Expectations are high generally, and companies will need to match them after their stock prices already neared records on anticipation,” the market broadly reflects. Micron Technology swung between a loss of 3.6% and a gain of 0.8% in morning trading, following a 14.4% surge over the first two days of the week that nearly fully reversed the prior week’s 13.3% plunge. The stock remains up roughly 240% for the year.

Brent Briefly Tops $95 as Hormuz Disruption Deepens

The oil prices rise Iran war Wall Street markets pressure is coming directly from the ongoing disruption to the Strait of Hormuz, through which roughly one-fifth of global oil and natural gas trade passes in peacetime. The fighting has kept tankers from using the route, driving crude sharply higher.

Brent crude, the international benchmark, rose 3.1% to $93.83 per barrel Wednesday — up from less than $72 early this month, which was roughly the prewar level. At one point during the morning session, Brent briefly topped $95 per barrel, reaching its highest price in nearly six weeks.

The average price for a gallon of regular gas in the United States jumped again overnight to $4.06, according to AAA — below the May peak of around $4.56 but well above the sub-$3 level seen before the US and Israel attacked Iran in late February.

Inflation and Rate Concerns Return

Rising oil prices are threatening to reverse the encouraging inflation progress seen in June’s Consumer Price Index, which showed prices cooling faster than expected. If oil-driven inflation resurges, the Federal Reserve and other central banks may feel compelled to raise interest rates — a move that would slow economic growth and weigh on stock valuations across the board.

The yield on the 10-year Treasury rose to 4.65% from 4.63% late Tuesday, and from just 3.97% before the war began. Elevated bond yields have already pushed long-term US mortgage rates to their highest levels in nearly a year.

European Stocks Rise, Asia Mixed

In overseas markets, London’s FTSE 100 climbed 1.6%, among the stronger gains globally. Hong Kong’s Hang Seng fell 1% in a broadly mixed Asian session.